Clock Strikes Midnight: Minnesota State Government Shuts Down

The state of Minnesota has officially shut down.

After weeks of intense negotiations, capped by closed-door sessions through Thursday’s waning minutes, Gov. Mark Dayton and Republican lawmakers failed to agree on an operating budget for the coming biennium.

“I deeply regret that after two days of intense negotiations we have failed to reach an agreement,” Dayton said during a 10:30 p.m. press conference in his office. “I offered a plan to raise the taxes of only those Minnesotans who make more than $1 million per year. That is less than 0.3 percent of the state population. Despite many hours of negotiations, the Republican caucus remains adamantly opposed to new taxes.”

And now that lawmakers have thrown in the towel, the shutdown mess left behind has Dakota County officials scrambling to tie down exactly what the ramifications of a shutdown are for the county.

“(Dakota County) is who delivers a lot of the safety net services to residents in the county even though they’re funded by the state,” according to Gail Plewacki, the county’s director of communications. As a result, she said county staff is still assessing the more than 150 state-funded but county administered programs to see if they’re going to be suspended.

But some of the bigger questions do have answers. Plewacki said the county isn’t expecting its $71 million stream of County Program Aid, or Federal funds—both of which come from the state—to be interrupted.

As a result, short-term, all of the county’s nearly 1,800 employees will still have jobs on Friday, Plewacki said.

At the Lakeville Area Public School District, the news was relatively good despite the specter of the shutdown. State aid to school districts must continue during the shutdown, according to a . And that was good news for a School Board that Tuesday evening for the 2011-2012 school year.

Meanwhile the city of Lakeville will see little impact according to City Administrator Steve Mielke.

The Impasse

Earlier in the week, Gov. Dayton said a deal would have to be done by Wednesday in order to draft and pass the necessary legislation. But Thursday, the governor continued meeting with GOP leaders on-and-off trying to put an agreement in place.

At around 10:30 p.m. Thursday, Dayton rejected a two-page temporary funding deal from GOP leadership that would keep the Minnesota government operational for an additional 10 days.

"There are a lot of people on the steps of the Capitol right now asking us to not shut down the government. This document is their answer,” GOP Senate Majority Leader Amy Koch said referring to the lights-on bill.

When asked his response to the 10-day temporary funding bill, Dayton’s answer was frank and clear: “I think it’s a publicity stunt,” he replied.

Fiscal year 2012-13 began at 12:01 a.m. today and, without a budget in place, the State of Minnesota was unable to fund its myriad services or pay salaries to its almost 33,000 state employees—22,000 of which left their offices today without a job to return to.

The heart of the impasse has always been the $1.8 billion difference between Gov. Dayton’s operating budget and the budget proposed by the GOP. Central to the issue is the method for closing Minnesota’s $5 billion budget gap. The DFL led by Dayton want a tax hike on high-income earners, and the GOP wants spending reductions.

Local Dollars and Cents

Dakota County’s $307 million budget for 2011 includes more than $59 million in County Program Aid and state grants, and another $12 million in Federal dollars that are doled out to the county through the state.

As late as Tuesday, those payments were not included in any barebones funding plans from lawmakers that were in front Ramsey County judges. But the comprehensive June 29 ruling by Judge Gearin made it clear Local Government Aid and other standing appropriations, such as Federal aid, was to be disbursed to counties, cities and school districts, Plewacki said.

“The ruling has taken some of the pressure off,” she said.

It also means a shutdown wont force the county to use reserve funds to pay routine bills.

Meanwhile, because the fate of those Local Government Aid payments was in limbo, the Lakeville Area Public School District earlier this month secured $9 million in Aid Anticipation Funding that will potentially cost the district $40,000 in interest. But now that it’s clear state funding wont dry up, it’s unclear if the school district can repay the funding and not be charged the interest.

At the city level, a very small portion of Lakeville’s budget comes from the state, and Mielke said very little was done in preparation for the shutdown.

No Local Layoffs

While many state workers went home Thursday night with nowhere to work on Friday, for the short-term, the same isn’t true for most of Dakota County’s workers according to Plewacki.

I can’t guarantee there will be no impacts on our workforce long-term,” she said. “If (the shutdown) is over quickly, we don’t have an issue with idle employees.”

For example, Dakota County’s license centers will remain open and operating, Plewacki said.

“The centers have everything they need—tabs, license renewal forms—to do what we need to do. The only thing is that when it goes from us to the state, they wont be finishing things on their end. But we can still remain open and do our jobs, at least short-term.”

It’s too early to say where layoffs could come from if a long-term shutdown were to persist, but Plewacki said it will affect only a “small portion” of the county’s workforce.

“We’ll do everything possible not to do that, but be very thoughtful if we do,” she said.

Layoffs at the school district and city were never a concern due to the shutdown.

Day-to-Day Impacts

It’s too soon to say how many programs and services could be stopped, Plewacki said, and as of Thursday night, Dakota County still didn’t have a comprehensive list of services that halted Friday.

“We’re still combing through some of the things on whether or not they’re going to be suspended, but major safety net services appear to be sticking around.”

In fact, owing to Judge Gearin’s June 29 ruling, services and programs such as Medical Assistance, MinnesotaCare, food stamps, county child protection services and services for the disabled joined state correctional facilities, nursing homes, public safety, and payment of medical services as “core functions” of government that will continue operating. Everything else is no longer functional until a budget deal is reached, including the Dakota-Scott Workforce Center in Bursville, which will close, as well as daycare subsidies for low-income families.

Several more details in Judge Gearin’s ruling will likely need to be addressed to determine which services will be cut, if any, Plewacki said. For example, it’s unclear in the ruling whether public health being considered a core service includes disbursing public health grant funding or only the payroll for state public health employees.  A number of county programs are facing this same uncertainty according to Plewacki.

Beyond social services, Minnesota Valley Transit Authority bus service to Lakeville should continue, at least initially, in the event of a shutdown, said Robin Selvig, MVTA's customer service manager. MVTA serves Eagan, Apple Valley, Rosemount, Burnsville and Savage, and has a contract for the routes that stop at the Cedar Avenue Park and Ride near 175th Street in Lakeville. The same holds true for Metro Transit and the Interstate 35 Park and Ride facility.

MVTA, which provides 10,000 rides daily, has enough fund balance to continue operating for about 60 days should the state government shutdown occur, Selvig said.

The only caveat, she said, is the 477V route that goes between Lakeville's Cedar park and ride and the Apple Valley Transit Station. If Metro Transit services can't operate, those routes wouldn't be able to either, she said. But she said MVTA has not heard from the council that they would not be able to operate those routes.

Meanwhile, the impact of a Minnesota state government shutdown on the Minnesota Department of Transportation will be major, with work on most MnDOT construction projects suspended.

Luckily though, the $34 million project on Cedar Avenue in Apple Valley and Lakeville will not be delayed or suspended, Plewacki said.

“The only impact on the Cedar project is the need for state inspectors and we can contract for those services,” Plewacki said.

Getting a Deal

The heart of the impasse has always been the $1.8 billion difference between Gov. Dayton’s operating budget and the budget proposed by the GOP. Central to the issue is the method for closing Minnesota’s $5 billion budget gap.

Gov. Dayton and the GOP leadership haven’t committed to a date for the next round of negotiations.

Follow the latest shutdown developments:

June 30:
June 30:
June 29:
June 29:
June 15:

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